I've written about Brazil pre-Lula and post-Lula and spent the last five years covering all aspects of the country for Dow Jones, Wall Street Journal and Barron's. Meanwhile, for an undetermined amount of time, and with a little help from my friends, I will be parachuting primarily into Brazil, Russia, India and China. But will also be on the look out for interesting business stories and investing ideas throughout the emerging markets.

Is It Time To Be A Bull Or A Bear? Survey Says...

Things you do with extra cash? Invest it in the stock market you say. Survey says!

In the last month, two major banks from both sides of the Atlantic released investor surveys. And both say the same thing: investors are more bullish this year than last, with the vast majority of the happy-go-lucky respondents being from Asia.

U.K. investment bank Schroders said so in their global investor survey released in May. Around the same time, The Economist Intelligence Unit released an interesting 39 page report, sponsored by BNY Mellon, called “The Search for Growth: Balancing Yield and Risk in Uncertain Times.”

The takeaway: go long equities, ease up on bonds as the Fed starts to taper out of quantitative easing. Schroders respondents said the same.

The BNY Mellon survey included 730 investors and business executives (Schroders had over a thousand), with a third in the U.S. and another third in Asia. Over 73% of them worked in investment banking, while the rest broke down into retail banking and asset management.

Here are some key findings in the report, released in May.

The global economy will improve.

A total of 72% of international investors expect the global economy to improve this year, scompared with 57% who said o last year. Asian investors are particularly optimistic (80%), followed by Europeans (72%) and North Americans (67%). Lingering uncertainties exist regarding the E.U.’s growth prospects and the impact of tighter U.S. fiscal policy. The eurozone will contract this year, according to the International Monetary Fund.

China good. U.S. better.

Investors are still bullish on China, yet they are increasingly looking to the U.S. and other smaller emerging markets for growth. When investors were asked to select the three best regions for asset price growth, 46% chose the United States, 42% chose China, 34% chose South-east Asia, 30% chose Brazil and 27% chose India. However, both India and—to a lesser extent—Brazil have fallen out of favor since 2010. Brazil is slowly creeping back.

Commodity bulls walk, don’t run.

In the past three years, investors have become less bullish commodities like oil and agriculture. This year, 30% of survey respondents said oil represented the best prospect for revenue growth in the next 12 months compared to 45% in 2011 who believed that was the best commodity. Oil is still the best commodity, only less investors think so today.

Buy equities. Sell bonds.

The Economist Intelligence Unit/BNY Mellon survey said that 53% of their respondents expect stocks to be the strongest performing asset class this year. Equities in China, South-east Asia and the U.S. are favored. Meanwhile, 22% of investors rated government bonds as most likely to increase in risk over the next 12 months as the Fed eases off the gas pedal.

Global investment activity is starting to pick up, signaling a rising appetite for risk amid a stronger growth outlook. Fears of an imminent euro zone crack-up ended once the European Central Bank launched its lender-of-last-resort program in September 2012. China is not going to crash land as a handful of very talkative pundits suggested all last year (except yours truly thanks to my smart sources). The U.S. is hobbling along. Unemployment is coming down below 7.5% now and staying there. The sequester will hurt, but for now the market is following in the footsteps of Ben Bernanke and his $80 billion a month purchases of bonds and derivatives. The market is being fueled by that liquidity. But fundamentals are improving along with the Dow Jones Industrials.

“We estimate that $32 trillion has been sitting on the sidelines of the global market for the past few years,” Tony Clark, CEO of London-based hedgie BAV Group told The Economist Intelligence team in their report. “Money is starting to come back into play.”

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.